The Influence Of The Macro Economic On CDS Credit In The Bankruptcy Process Based On Law In Indonesia

 If we talked about a credit default swap or we can say (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives payment if the underlying financial instrument defaults or experiences a similar credit event. CDS may refer to a specific loan or bond obligation of a "reference entity," usually a corporation or government.

 Two decades have passed since the first credit default swap (CDS) contracts were traded in 1994 [Tett, 2009]. The market has grown spectacularly, especially since 2000. The market experienced a boom in 2001--2007, followed by failure following the 2008 Lehman bankruptcy. But most importantly, the market has proven resilient in the face of several major shocks and corrections. The Russian failure in 1998, the restructuring of Conseco Finance in 2000, the 2008 AIG bailout, and the 2012 Greek default all contributed to the formation of the formalization of the CDS contract and its trading procedures as we know it today. The seminal study by Longsta et al. [2005], which uses CDS as a tool to separate credit from liquidity risk in the firm's yield spreads, is by far the most cited paper on CDS, and it provides an excellent introduction to the CDS contract and its markets. Since the publication of their paper, the CDS literature has grown. Therefore, our survey covers mostly studies in the last decade.

 The bond between CDS and related markets, particularly the bond and equity markets, is interesting and important. Although the theory predicts the accounting identity between CDS and bond spreads and the relationship between CDS and equity markets, investors view the significant price difference during the financial crisis as a great arbitrage opportunity. The price differential is very strong between the CDS and bond markets, giving rise to the so-called negative CDS bond base. Understanding the basics requires a thorough analysis of market differences. While the literature has made progress in understanding why asar becomes negative, we are still far from understanding why it remains negative for such a long period of time. In addition to price differences, we also cover the literature on information flows between CDS and related markets, and the related concepts of price discovery. Finally, we examine how the inception of CDS has affected the price, efficiency and liquidity of the closely related market.

  A credit default swap is designed to transfer the credit exposure of a fixed income product between two or more parties. In a credit default swap, the buyer of the swap makes payments to the seller of the swap until the expiration date of the contract. In return, the seller agrees that if the debt issuer (borrower) defaults or experiences another credit event, the seller will pay the buyer the value of the securities. This includes all interest payments that will be paid between that time and the security's maturity date. 

  In the world of credit default swaps, credit events are the triggers that cause the protection buyer to decide and complete the contract. Credit events are agreed upon when the trade is executed and are part of the contract. The majority of single name CDS are traded with the following credit event as a trigger. These include bankruptcy of the reference entity, default, acceleration of obligations, disclaimers, and moratoriums. Bonds and other debt securities carry a risk that the borrower will not pay the debt or interest. Because debt securities often have a long term to maturity. 

  So we can say namely for 30 years, it is difficult for investors to make reliable estimates of risk. Credit default swaps have become a very popular way of managing this kind of risk. The US Currency Watch publishes quarterly reports on credit derivatives and in a report published in June 2020. This report places the size of the entire market at US$4 B, of which CDS accounts for USD 3.5 B.